Gov’t backtracks on San Pascual supply deal offer
Saturday, February 11, 2006
By MYRNA M. VELASCO
Government-run agencies, primarily the Department of Energy (DoE) and Power Sector Assets and Liabilities Management Corporation, are likely to backtrack on previously-hinted plans to offer the power purchase agreement (PPA) for the shelved 300-megawatt San Pascual power project to investors putting up new capacity.
In deference to the provisions of the Electric Power Industry Reform Act (EPIRA) which prohibits government from cornering new power supply contracts, Energy undersecretary Melinda L. Ocampo pointed out that even the plan to offer the PPA originally intended for the San Pascual facility may no longer be pursued.
"We are still seriously studying it, but we are very careful because of the EPIRA’s provision banning government from entering into new power contracts," she noted.
It has been previously reported that Korea Electric Power Corporation (Kepco) has been eyeing the San Pascual supply deal for the proposed 600megawatt expansion of its Ilijan natural gas-fired facility.
Sources however hinted that instead of just cornering a contract for 300 megawatts; the Korean firm prefers that its entire capacity addition be covered; and here lies its dilemma now with government.
Section 47 of the law prescribes that the National Power Corporation "…shall not incur new obligations to purchase power through bilateral contracts with generation companies or other suppliers."
The government initially mulled of giving out the San Pascual contract to whoever would be buying the idled Sucat power facility; but since the process has been delayed, talks of flipping it to other investors also halted for some time.
Privatization planners have opined that with a power purchase contract lumped to an asset being divested, this will help soften the risks confronting prospective investors; as against in a merchant environment where project sponsors would have to scour for buyers of their electricity outputs.
To date, PSALM being NPC’s transferee-company, has yet to pay up the .0 million cancellation fee which has long been demanded by project proponents of the shelved San Pascual cogeneration project.
The original amount being demanded by project sponsor San Pascual Cogeneration Company (SPCC) was million, but after series of negotiations, the latter conceded to a smaller amount of .0 million.
On top of this amount, SPCC also sought pay back of the .0 million performance bond deposit that it placed when it bagged the project’s contract. The former SPCC consortium comprises of US firms ChevronTexaco, Inc., Edison Mission Energy and SPCC International B.V. Netherlands.
The return of the surety bond and reimbursement of accrued costs for the proposed facility’s implementation were among the issues stringently tackled by the project sponsors and PSALM at the course of negotiations for the termination agreement.
As a matter of policy, the performance bond has to be released by the Bangko Sentral ng Pilipinas (BSP) upon all requirements are complied with.
It, was, however set as a precondition that the release of the bid deposit can only be done once the termination agreement has already been finalized by the parties and approved by concerned government agencies.
It was a standard requirement that project proponents for infrastructure projects, particularly those undertaken through a build-operate-transfer (BOT) scheme, to post performance or surety bonds to ensure their commitment of carrying out the projects based on terms agreed with the government. (MMV)
posted by philpower @ 4:38 PM,
